Pay Day

Months after adding support for both accountants and contract employees, cloud payroll startup ZenPayroll has reached some a major milestone in terms of adoption. The company announced today that it is now processing over $100 million in payroll each year.

This milestone comes almost entirely from the state of California as ZenPayroll is only today expanding beyond its home state by opening up access to its platform in Texas, Florida, and Washington. New York and Illinois will follow within weeks with a nationwide rollout by year’s end and expansion to Canada expected in 2014. Turning on new markets isn’t as simple as just flipping a switch. The company must first spend a significant amount of time mapping out and then automating the various regulatory and tax considerations for each municipality and state so that its users don’t have to.

“We’ve seen tremendous demand across the country from scores of small businesses owners and we’re excited to be expanding,” says ZenPayroll co-founder and CEO Joshua Reeves. “We won’t stop until we can help all businesses, everywhere.”

ZenPayroll’s growth can be traced back to one nearly universal truth: Payroll, as traditionally handled, is a miserable experience. Between taxes and compliance at the local, state, and federal level, properly calculating and reporting payments to employees can become an almost full-time job. Small companies typically rely on a bookkeeper or accountant to manage this service, if the founder is lucky enough not to be responsible for payroll himself. Enterprises typically turn to legacy vendors like ADP, Intuit, and Paychex, although these companies are generally as unbearable to work with as they are expensive.

As its name states, ZenPayroll’s aim is to make the payroll experience a joy. According to its early customers, which include  Y Combinator (where it was a member of the W12 class), Clever, SendHub, and SwiftType, among many others, it’s largely succeeding at this goal.

ZenPayroll allows the administrator to quickly input key details like employee hours, overtime pay, bonuses, reimbursements, garnishments, benefits, etc., from which the platform then automates payroll tax calculations and payments, and enables direct deposit and paperless filing of payroll-related government documents. For employees, the platform offers direct and persistent access to their personal profiles, even if they change employers. Employees can change their payment settings, access payment records and employment documents, and review and manage benefits data.

But despite the siren song of cloud-based software and beautiful user interface design, ZenPayroll remains just a drop in the bucket compared to the size of its primary competitors. Combined ADP, Paychex, and Intuit they represent approximately $50 billion in publicly traded market cap and tens if not hundreds of thousands of customers. For ZenPayroll to unseat these enormous, but slow-to-innovate competitors it will need to do more than excel in product design. It will need to build a killer sales organization, something that it is just beginning to attempt.

ZenPayroll raise the largest Seed round in YC history, at $6.1 million from both leading VCs and top Silicon Valley founders. With many of these backers using the platform themselves and helping spread the word, ZenPayroll is saw rapid adoption within the California technology community. It’s since branched out to traditional small businesses like florists, auto service stations, and accounting firms. The next step is to replicate this success in other markets with the goal of claiming as large a share of the 6 million or so small- and mid-sized US businesses as possible.

Payroll is one of those necessary evils of running a business. But it doesn’t have to be miserable. People love getting paid. And business owners typically love providing for their employees. It’s all the administrative and bureaucratic stuff that happens in between that ruins the experience for everyone involved.

ZenPayroll’s rapid growth is reflection of the level of unhappiness with current solutions and is a testament to the fact that the company delivering on its promise of better payroll. It’s a message that the company hopes to spread far and wide.

  1. ZenPayroll is Delightful, Modern Payroll. Sign up today at http://www.zenpayroll.com.

    Our mission is to make payroll as simple & intuitive as possible using the principles & tools of modern software. The payroll market today is filled with unnecessary layers of complexity, manual tasks and numerous fees. We built ZenPayroll to fix this.

    Please reach out, we'd love to share with you what we're doing and see if there's a way to work together.

    1. Benjamin Ling
      Past Investor
    2. David Lee
      Past Investor
    3. David Sacks
      Past Investor